Accelerated diplomatic momentum is in the air, along with the apparent slowdown
of Palestinian suicidal terrorist action against Israel. Egyptian president
Hosni Mubaraks two senior envoys, his political adviser Osama el Baz and
intelligence chief Gen. Omar Suleiman, arrive Sunday, July 7, for talks in Israel
and the Palestinian Authority. Israeli prime minister Ariel Sharon has named
a high-ranking team to translate President George W. Bushs new Middle
East principles into practice, initiating a plan for enhancing Israels
security while distributing economic benefits to the Palestinian population
not engaged in terrorism. Sharon has directed foreign minister Shimon Peres
to start a dialogue with the newly appointed Palestinian ministers of economy
Salam Fayeed and interior Abdel Razak al-Yahya.

However, the leaked litany from the prime ministers office in Jerusalem
alleges that Yasser Arafats government overhaul is not a genuine reform
program but steps for tightening his grip on Palestinian government. He has
issued no orders at all to hold back Palestinian terror against Israel. Sharon
has therefore urged European Union leaders to withhold subsidies from the Palestinian
Authority, as the funds go straight into the hands of groups preparing fresh
terrorist campaigns.

DEBKAfiles political sources can confirm that the common thread running
through Arafats new appointments is the removal of officials who pose
a threat to his rule.

Jibril Rajoubs dismissal as chief of the West Bank preventive security
apparatus has been forced down his throat, but he still retains control of his
4,000-man militia and refuses to take up the Jenin Governorship vacated by his
designated successor Zuhair Manasra. Arafat believes he can put down the revolt
staged by 600 officers loyal to Jibril by handing round cash. He is not short
of funds, whether Arab, European or private, for buying obedience.

Two other would-be challengers to Arafats authority, Muhamed Dahlan, Jibrils
opposite number in the Gaza Strip, and Mohamed Rashid, his personal financial
adviser, have removed themselves and their families to London under the protection
of British security. They, like Jibril, must be asking themselves how they came
to fall so hard from positions of such high authority.
Abu Mazen, Arafats veteran deputy and official successor, has gone to
ground in one of the Persian Gulf emirates. Hundreds of affluent Palestinians
have taken advantage of the summer vacation to shut their villas and make tracks
for European and American resorts after liquidating their assets in Israeli
and Jordanian banks.

According to DEBKAfile s political sources, Sharons diplomatic performance
is as phony as Arafats reforms, except that the Israeli prime minister
is backed to the hilt from the White House  a prime asset he will never
do anything to jeopardize.

According to DEBKAfiles military and political sources in Washington and
Jerusalem, the Israeli prime ministers next move will be a large-scale
military counter-terror offensive in the Gaza Strip. This territory was omitted
from the broad military operations Israel has been conducting in the West Bank
since April. It will aim to uproot the terror infrastructure maintained by the
Hamas, the Jihad Islami and the Popular Intifada Committees that coordinate
Gaza Strip-based Palestinian operations. Dahlans organization faces the
same fate as suffered by the command nucleus of Jibrils preventive security
service in Bitunia  another reason why Dahlan has made himself scarce.
That Dahlans preventive security service, its commanders and
men, was in fact a front for highly-sophisticated terrorist activity, including
the development of such diabolical devices as cell phone-activated bombs, has
come to be accepted by Washington.

That force was unique in receiving both CIA training in counter-terrorist techniques
from 1996 to 1998 and in super-terror tactics as imparted thereafter by the
Lebanese Hizballah. Dahlans deputy, Rashid Abu Shbeik, who has taken over
the reins of anti-Israel terrorist operations, including the mortar and Qasam
missile attacks plaguing Israelis living in and around the Gaza Strip nightly,
will now be in the IDFs sights.

As DEBKA-Net-Weekly reported in its latest issue (No. 67, July 5), the IDF has
also marked down the local paramilitary gangs roaming Palestinian towns in the
Gaza Strip. This is a departure from its method of operation in the West Bank.
The Gazan gangs, which deal in the smuggling of drugs, weapons and prostitutes,
number between 50 and 300 members each and maintain underworld connections in
Egypt, Jordan, Israel, Lebanon and Saudi Arabia. They also volunteer their services
to Palestinian terrorist groups for free, whether as gunrunners, spies, informers
or killers.

Concentrated most heavily in the north Gazan towns of Beit Hanoun and Beit Lehiya,
in Gaza Citys Jabalya refugee camp, in Khan Younis in the south and in
the divided town of Rafah, some are as well organized as small militias. Egypt
in close coordination with the US and Israel will run its own clean-up operation
against the Palestinian gangs at large in Egyptian Rafah and the northern Sinai
town of El Arish.

Like the current military operation on the West Bank, so too will the Gaza campaign
be open-ended, requiring additional call-ups of reserves. Israels prime
objective now, with Washingtons tacit blessing, is to acquire strategic
control of all Palestinian areas, so as to prevent a second Palestinian front
from opening up to the rear of Israeli forces fighting in the coming military
operations against Syria and the Hizballah in the north and, potentially, against
Iraq in the east. Israels military presence will keep open the strategic
routes linking the Mediterranean with the Jordan River and eventually the Tigris
and Euphrates, as well clearing the way to the Hatzbani and Litani Rivers of
Lebanon.

Moreover, while there is no watertight preventive treatment for Palestinian
suicide murders in Israeli towns, their scope and impact on the regional situation
will be sharply reduced.

Yasser Arafat has thus far weathered the initial damage he sustained from the
combined US-Israel swipe. He has begun to steady himself in anticipation of
salvation from three directions:
1. A solidarity offensive by the Hizballah, in the form of a missile and rocket
barrage the length of the Lebanese-Israel frontier targeting all of northern
Israel and reaching into its central heartland. The Lebanese Shiites will accompany
their barrage with large-scale terrorist strikes inside Israel and possibly
Jordan, the cue for a fresh round of Palestinian suicide massacres in Israels
town centers and along its highways. The Palestinian leader will order this
onslaught although he knows the IDF has enough resources to punish Syria for
backing the Hizballah while also keeping its tanks inside Palestinian towns
in both the West Bank and Gaza Strip.
2. US-Iraq hostilities that may well open up  not with an American strike
 but with Iraqi pre-emptive action against the US forces poised inside
Iraq and in neighboring Jordan for the American offensive against Baghdad. Iraq
may also hit US military targets in other parts of the Middle East, including
Israel and the Saudi and Gulf Emirates oil regions.
3. A mega-terror strike against the United States or Israel  with conventional,
nuclear, chemical or biological weapons - that would attain such calamitous
proportions as to undo Americas military and political position for the
Middle East.

Whatever the surface appearances, therefore, the immediate horizon seems to
hold greater promise of conflict than of diplomacy.